What effect will Euro introduction have on Polish property prices?

Polish property – an exceptional opportunity

Less than a year after taking office as Prime Minister of Poland, Donald Tusk could justifiably describe his country as an ‘island of stability’ in the economic chaos facing most of Europe.  While its European Union neighbours are struggling with slowdown or recession, Poland is still enjoying economic growth.  Although the country may not prove completely immune to the global financial crisis, the signs are that it will weather the storm more robustly than many others.

One of the key reasons for this is the more cautious approach to lending by Polish banks, and particularly to mortgage lending.  Mortgage debt represents less than 10 % of GDP in Poland, compared to 83% in the UK, while poor debtors only account for 1% of Polish mortgages, as opposed to 15-20% in the USA.  By making fewer and more sensible loans, Poland’s banks have not only limited their own risk, they have also helped to create a stable and buoyant property market, another European rarity.

There’s another factor which makes Polish property even more appealing to investors: although the proposed date of 2012 has not been agreed yet, Donald Tusk is determined to adopt the Euro, which should bring greater strength and depth to the property market in Poland.  Historically, joining the European currency has had a positive effect on local property prices in countries like Cyprus, Bulgaria and Spain.  Demand for property in Poland is strong, from investors, local people and from the steady stream of Polish émigrés returning home, and double digit growth is still a very real prospect. With solid fundamentals and a bright outlook, the property in Poland offers an investment potential which is very hard to match elsewhere. 

Posted October 2008

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